New law will punish companies for moving their headquarters overseas while the
bulk of their interests are in America

US politicans are to unveil proposals to block American companies from winning government contracts if they move their tax headquarters overseas, unless they can show they have substantial business in their new “host” country.

The new legislation comes just days after President Barack Obama attacked US firms seeking to reduce their tax bills by buying European businesses as “corporate deserters” who show a lack of “economic patriotism”.

His comments were targeted at companies like AbbVie, the US pharmaceuticals giant buying Britain’s Shire for £32bn, and Pfizer, the American drugs firm which courted UK rival AstraZeneca.

The “No Federal Contracts for Corporate Deserters Act”, to be unveiled in Washington, would punish companies for moving their headquarters overseas while the bulk of their interests were in America.

Companies would not be allowed to bid for lucrative government contracts unless they could justify basing their operations in another country. Firms would also have to show that at least half of their shareholders were outside the US, not just 20pc as has been required in the past.

The proposed legislation is backed by a group of Democrat Senators and Congressmen, including Senator Carl Levin, chairman of the powerful Permanent Subcommittee on Investigations, which has been cracking down on tax avoidance by US corporations and wealthy individuals.

Although it would have to clear a string of hurdles and gain Republican support before being passed into law, the uncertainty it presents is likely to put a dampener on the string of recent acquisitions by US companies, which have been motivated by tax savings in a process known as “inversion”.